Based off of what commercials, rapid refunds are a great way to get your tax refund in cash ultra-fast in exchange for a meager fee. Although getting money that quickly feels nice, how necessary is it?

Families whose situation requires them to live paycheck to paycheck may be interested in getting a rapid refund from popular tax centers such as H&R Block or Jackson-Hewitt. These companies will file all the paperwork associated with your taxes and then help you apply for their rapid refund program. Getting a wad of refund cash right away really is appealing when bills need to be paid and last weeks paycheck is already gone.

Although it seems so easy on the surface, rapid refunds are more complicated than that. In reality, they are refund anticipation loans, abbreviated RAL's. Just all loans, they bring with them interest and finance charges.

We've heard of refund anticipation loans as well. Most people hear those words and they think, "No, I don't want to take on a loan." But if they hear "rapid refund", they are on board. The reason is that people don't equate a refund with a loan. In our minds, one is better than the other.

The reason for the name change is that people felt defrauded by the advertising. If they had known it was a loan, they would not have taken advantage of the offer. At the onset, the interest rate charged for one of these loans was staggering. To make matters worse, the people who seemed to be targeted were low income earners receiving the earned income tax credit (EITC).

A family who really needed their tax refund right away was able to get it as a result of the rapid refund program. But, if the person applying for the rapid refund was not aware of the high charges they would be charged on the loan, and even if they paid as soon as possible, the extra they had to pay because of interest on their refund of a few thousand dollars was astronomical.

Something that not many people understood at that time is that electronic tax filing gets you your refund in just a couple of short weeks, which is still pretty fast. A tax preparer can complete the necessary forms on the IRS's website in your behalf, even if you don't have your own computer.

If you don't have a bank account, electronic filing is still possible, you will just receive a check by mail instead. In order to get your money even faster through direct deposit, you can open an account at a credit union associated with your church or workplace. These accounts tend to be easy to open and require extremely low minimum balances, sometimes just twenty-five dollars.

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